There are a lot of things you can do to proactively protect your intellectual property (IP) when you are outsourcing production into China.
The Chinese NNN agreement may be one of the most important parts of the overall picture.
If you want to hear about NNN agreements, you are in the right place.
In this article, you will learn what’s involved in an NNN agreement, why you need it, and how it can help your business succeed in China.
What is an NNN Agreement?
So, first thing first. You may want to know the definition of an NNN agreement especially if you are new to Chinese manufacturing.
NNN stands for non-disclosure, non-use, and non-circumvention. The three Ns include:
- Non-Disclosure: Don’t tell anyone
It means that the counterparty can’t disclose any confidential information you provide.
- Non-Use: Don’t use the information
This means that the counterparty can’t use your IP for any purposes other than for your benefit under the contract.
- Non-Circumvention: Don’t go around your back
It means your manufacturing contractor can’t circumvent you and sell to your customers directly, usually at a lower price.
An NNN Agreement is a type of confidentiality agreement used in business dealings with Chinese companies, particularly Chinese manufacturers.
An effective NNN agreement can be used to protect your confidentiality such as product details, drawings, marketing strategies, etc. when working with manufacturers directly in China.
It’s a Chinese equivalent to the western world’s Non-Disclosure Agreement (NDA).
Difference between An NDA Agreement and An NNN Agreement
A Non-Disclosure Agreement (NDA) focuses on protecting trade secrets in the US. while an NNN can be used to safeguard IP in China.
To be considered protectable property, a trade secret must stay a secret. As such, NDAs are typically aimed at preventing the disclosure of trade secrets to members of the public.
Therefore, an NDA agreement focuses narrowly on confidential information from being revealed to the public.
Typically, an NDA agreement is written in English, subject to U.S. law, and exclusively enforceable in a U.S. city and state.
The Advantages of a Chinese NNN Agreement
Whether you work with an existing Chinese manufacturer or looking for a new one, building and signing a legitimate contract will guarantee the safety of your company’s confidential information.
Here are some good reasons why you should sign up for an NNN agreement.
1. Protect Sensitive Information
The primary advantage of an NNN is that sensitive information about your company remains secure.
This could involve anything like proprietary data, patents, finances, negotiation terms—anything confidential.
Signing an NNN agreement is a method to protect private details from coming out publicly or being used by the manufacturer and their staff members.
2. Build Trust
Having confidentiality when writing and signing agreements between your company and your chosen manufacturing supplier lends trust to these types of negotiations, thereby deterring the possible theft of intellectual property.
You can also use this agreement to detail your expectations for the Chinese manufacturing process, including specifications for quality control and product safety.
3. Avoid Unapproved Subcontracting
Some overseas companies that outsource production to China discover that their manufacturing suppliers rely in turn on layers of subcontractors, without the buyer’s knowledge or approval.
With this contract in place, you can reduce or even eliminate the problems caused by unethical manufacturing suppliers who could steal your IP and pass it to their subcontractors.
A Step-By-Step Guide To Protect Your Intellectual Property in China
Keep a Close Eye on Your Manufacturer
Before working with a manufacturing company in China, it’s always a good idea to do due diligence. You should understand the tier of different suppliers and the transparency of every production stage.
When working with a reputable supplier, you still need to keep a close eye on their company updates by continuous monitoring.
Filing your IP Rights In China
Though you have your IPR registered in your country, you may not be protected by any foreign law or foreign judgments in China. Instead, the Chinese law and the Chinese court protect your right.
For overseas businesses engaging in import-export, they are suggested to file their IP information and register for trademark protection with relative authorities in China.
Sing An NNN Agreement
When partnering with a manufacturing company, make sure you have a well-drafted and properly executed NNN agreement that will help you protect your IP, and provide you with relief if the manufacturer breaches the agreement.
Choose A Reliable Manufacturing Partner
Finding a reliable manufacturer in China can be daunting and time-consuming. Shield Works can be your local manufacturing partner to safeguard your IP and meet your production expectations.
As a British-owned and managed company, Shield Works is committed to protecting every aspect of your IP without excessive costs and time.
Shield Works partners with Innopat, a leading Zhuhai-based IP industry expert, to provide you with clear IP protective manufacturing services in China. In addition, Innopat is a professional patent and trademark agency authorized by the National Intellectual Property Administration of the People’s Republic of China.
We also have our IP Protection flagship facility to conduct activities from manufacturing, and product assembly to quality inspection and warehousing.
In this case, you no longer have to worry about the risk of copy-cat manufacturing. Contact us to diss your project today!